UGB #518 - Aviation capacity develops beyond normal norm
#518 - Aviation capacity develops beyond normal norm
In the world of "Bright Sword", after the establishment of the European Aviation Safety Agency (EASA), more than 10 European countries began to promote European standard certification for aviation. Since the establishment of EASA, new airliners flying on routes in these European countries need to have this certification.
To facilitate this outcome, John Bull had to release some of its Airbus shares to Gaul and Prussia, and also transferred some aviation component production, in order to first achieve a three-way alliance to jointly promote European aviation standards.
In this way, Douglas and Boeing's new models would also have to accept European standard certification if they wanted to enter the European market.
The FAA, which had previously been critical of the Airbus A300 in many ways, suddenly became normal and began to speed up the certification process. With ample data on the Airbus A300, the FAA issued certification for Airbus's A300!
Prior to this, dozens of A300 and CAC-120 airliners had been delivered. Their reliability, durability, low maintenance, and low fuel consumption significantly reduced the operating costs of airlines, allowing European aviation giants such as BAE, Lufthansa, and Air France to taste the sweetness, and they successively placed additional orders to continue purchasing. Among them, they also placed more than 200 orders for the long-range Airbus A300L that Airbus was improving!
The low operating costs, coupled with a lower per-seat price than competitors, gave European airlines a competitive edge over their North American counterparts on medium and short-haul routes within 3,500 kilometers.
This led some weaker North American airlines to extend olive branches to Airbus. Northwest Airlines and Allegheny Airlines were the first to place orders, ordering a total of 50 Airbus A300s!
For a time, the Airbus A300 began to become the preferred choice for regional aviation!
However, the booming market brought not only joy to Rolls-Royce President Robert, but also the trouble of constantly being urged to deliver by airlines. President Robert, in pain and happiness, had to go to Yandu to discuss the issue of capacity expansion with Dongda's partners.
Yandu Aviation Industry VIP Conference Room.
"Chen, our production capacity must be expanded." President Robert said straight to the point, "The orders for our Airbus A300 alone have exceeded 1,000, and the orders taken by the CAC-120 have exceeded 2,000. However, our current production capacity is only about 100 units per year, which is not enough to meet market demand. It is time for us to substantially expand production capacity."
It was unforgivable for President Robert to leave a large number of orders unrealized.
The current situation is exceptionally good. If the delivery is not strong enough, causing customers to switch to competitors, President Robert would not even have time to cry.
"Yes, Robert, we are also discussing this issue, but how much capacity expansion is appropriate requires coordination between us." General Manager Chen Hanyuan interjected. He had not fully anticipated this gratifying situation. Although Ren Zhong had guaranteed that it would work, Chen Hanyuan and others, who had little concept of airliner sales, would not understand these business matters. He was merely faithfully executing Ren Zhong's plan.
Who knew that such a large market would be created in just a few years.
In particular, the overseas market became an instant hit. This is currently a leading mainline airliner!
"According to our calculations, our orders will continue to increase in the next few years. There is basically no suspense that the sales volume of Airbus A300 / CAC-120 airliners will exceed 3,000. If we want to achieve the delivery of these airliners within ten years, we need to reach an annual output of at least 300 units, or even consider reaching a production capacity of 400 units." President Robert proposed a rather frightening number, increasing the production capacity by 4 times at once!
This is not a small number, which means that the current airliner production line needs to be expanded from one production line each to four!
Moreover, it is not only the complete aircraft production that needs to expand production capacity, but also many supporting parts enterprises upstream must also expand, especially since the aviation engines and avionics equipment are all exclusively supplied by Dongda's supporting factories. This is equivalent to Dongda needing to expand by 4 times, if not considering releasing all of this production capacity.
The related investment is a considerable figure for Dongda!
Don't think that the annual production capacity of 400 airliners is too large. In the main world, Airbus's annual output has already broken through to about 500 units per year!
After these production lines are built, they can not only produce Airbus A300 and derivative models, but also produce A300L and its derivatives, as well as new large airliners such as A320 and A330!
Yandu.
In an ancient conference room, Chief of Staff Ye, Ren Zhong, and other important personnel were prominently present. More than a dozen important figures were listening to Chen Hanyuan's report. Here, Chen Hanyuan's level as president was actually the lowest.
"The situation is like this, leaders, now Rolls-Royce and Airbus President Robert are waiting for our decision." Chen Hanyuan reported the matter succinctly.
The heads of various ministries and commissions, holding the report, looked through it while listening, and they could hardly believe everything they saw!
Sell more than 3,000 Airbus A300s in the future?!
You must know that this is an expensive thing with a selling price of more than 5 million US dollars. What is the concept of 3,000 units? 15 billion US dollars, equivalent to 45 billion Dongda!
You must know that Dongda's national GDP has only recently broken through 300 billion!
The sales of this aviation product are too terrifying.
After reading the report, everyone couldn't help but look at Ren Zhong.
They were all very clear about who had brought Dongda's aviation industry to its current state.
"Dean Ren, it seems that everyone is waiting for your opinion. We really don't understand this. We can only do some hard work. What do you say we should do? Should we greatly expand production capacity now?" Chief of Staff Ye said to Ren Zhong with a smile. On formal occasions, Chief of Staff Ye still respected Ren Zhong very much and was not as casual as he was in private.
"Chief Ye, our production capacity should have been expanded long ago." Ren Zhong was not polite either. In this regard, he would not give way. Otherwise, it would be a little late to discover that everyone had gone into the ditch.
"We do need to expand the production capacity of 400 units. Now we have only received this order quantity for one model. When our CAC-130 / 140 / 150 series of derivative models come out, sales will be even more popular. From the current level of technology, our airliner is fully leading in regional aviation." Ren Zhong continued.
“I wouldn't be surprised if our future order increases break through 5,000 aircraft, so improving delivery capacity is unavoidable. Given our current domestic conditions, we have all the equipment for a complete production line, except for some equipment on the production line for aero engines, which is somewhat lacking. However, we can request this from Rolls-Royce and import some equipment from John Bull or Europe. After all, we haven't yet achieved complete leadership in machine tools, and some specialized machine tools are still most advanced in Europe.”
“Overall, we must expand this production capacity, as it will be a huge boost to our entire aviation industry chain. In this regard, we must maintain a good balance. First, the principle that we continue to provide aero engines and avionics entirely by ourselves remains unchanged.”
“For other components, I suggest we still follow the original agreement: passenger planes sold in a particular market should be primarily assembled and sold by the aircraft manufacturer in that region, including after-sales service. However, for aviation sales to Third World countries, we now need to consider geographical divisions and avoid mutual competition.”
Although Ren Zhong didn't expect this aircraft to become so popular so quickly, he anticipated the overall situation. After all, in the main world, there are already examples of Boeing and Airbus competing, and medium- and long-range regional jets are the mainstream.
The Airbus A300, a low-operating-cost aircraft suitable for intra-continental routes, is precisely the advantageous product for airlines to expand their territory. The more airlines that buy it, the more it creates a herd mentality.
Because on the same routes, if competitors choose this aircraft and you don't, you won't be able to compete with them in terms of cost advantages. Wouldn't that lead to becoming increasingly passive?
So, after competitors buy such aircraft, you have to grit your teeth and keep up!
For top European airlines like BAE, Lufthansa, and Air France, many of their routes overlap, making mutual competition inevitable. Therefore, they will discuss using the same aircraft to ensure their profitability.
However, in the vast Third World countries, many domestic routes are monopolized, and international routes are where mutual penetration occurs.
If Airbus and Dongda Yan Aviation compete with each other to seize such territory, it is obviously unreasonable.
They should have an understanding, each choosing a suitable range to fully compete with the three major competitors of the rogue eagle!
“But, Dean Ren, building so many production lines requires a significant investment. Each production line costs almost 2 billion, and building three lines requires an investment of around 7 billion. Our current total investment in infrastructure is just over 100 billion, which includes large-scale infrastructure and production facilities such as railways, highways, energy, steel, electronics, and chemicals.” The head of the investment and development ministry said with a stiff upper lip. What he said was correct. The wave of domestic construction in Dongda is coming one after another, and there are too many places that need to be built to realize national industrialization.
“Frankly speaking, purely from our infrastructure funding plan, we don't have that much money at all. Using this funding, it would be very difficult to build even one production line.” Another department head next to him also complained.
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“Yes, Dean Ren, the expansion pressure on our Aviation Industry Department is also enormous. A production capacity of 400 aircraft means that our aero-engine production capacity must reach over 800 units. If we add the maintenance and replacement of old models, the aero-engine production capacity needs to be over 900 units per year. This investment is also several billion, and our Aviation Industry Department can't come up with that much money.”
It wasn't just them; the Ministry of Electronics and the Ministry of Machinery Industry also started complaining.
“The matter of money is easy to handle.” Ren Zhong said with a smile before Chief of Staff Ye could speak, “We can issue a wave of aviation bonds nationwide, even globally. I think we can issue 100 billion in 10-year long-term bonds with an interest rate of 5%, specifically for infrastructure investment in the aviation industry, which will solve most of the problem.”
“According to our production capacity, in the future, when we achieve a production value of 400 aircraft, the annual output value we obtain from the aviation industry chain, according to our current division of labor, will account for more than 65%. In other words, we will receive a revenue of nearly 5 billion from this pure passenger aircraft production aviation industry chain, with a profit of at least 2 billion. Taking out 500 million in interest each year is not a problem, and repaying the principal in 10 years is also not a big problem.”
After Ren Zhong finished speaking, he changed the subject, “Our bigger problem is the shortage of senior skilled workers in the aviation industry, especially workers who process precision equipment such as aero engines. In this regard, we should make every effort to increase training from now on. Given our current level of economic development, there are quite a few wealthy families across the country, and we should be able to issue 100 billion in bonds domestically.”
“But senior workers cannot be trained overnight. How can senior welders and fitters be trained without more than 5 years of dedicated training?”
Ren Zhong's words silenced everyone in the conference room.
After all, it wasn't that everyone hadn't thought of this problem, but they usually didn't want to think about these things. If there was a shortcut to take, these people would be eager to take it.
“Okay, let me summarize. Everyone agrees on expanding production capacity now. We must expand and earnestly implement the current orders in the aviation industry and do a good job in delivery.” Chief of Staff Ye said,
“If we don't have money, we will issue aviation bonds, but the problem of personnel is not a small problem. Since everyone didn't come up with a reasonable and effective plan today, I hope to see such creative projects brought over for research at the next meeting.”
“Accelerate the speed of talent cultivation, increase the thickness of the aviation talent echelon, and continuously provide a large number of qualified talents for enterprises and research institutions in the aviation industry chain.”
“Chen Hanyuan, General Manager Chen, go back and tell Robert that we, Dongda, are following up with this wave of aviation industry expansion and directly expanding production capacity to 400 aircraft.” Chief of Staff Ye concluded, “We must fully seize this opportunity for great development in the aviation industry and resolutely not be afraid of difficulties and dare not develop ourselves. Judging from the development speed of the past two decades or so, especially the development in recent years, we have been advancing at a rapid pace. Everyone is a person in charge of the related industry chain, so we must broaden our horizons and patterns and not stare at our own small patch of land, ignoring the development of our upstream and downstream. This is not right. Everyone must have a sense of overall situation and a sense of the big picture.”
Chief of Staff Ye took the opportunity to knock on the heads of everyone, “The breakthrough opportunity for the development of our aviation industry has arrived. If we are still timid and dare not do things now, then we will become sinners in the future development of Dongda's aviation industry!”
After the opinions above were unified, Chen Hanyuan could operate boldly on the following matters. (End of this chapter)